What I should be entitled to

A free e-book (or the option to purchase one for 0.99) when I already own a hard copy. Due to a misprint, the book I’m currently reading is missing 50 pages! Since I bought from Borders a while ago, trying to return it was not an option. I’ve been having to endure Google’s dozen or so page limit per day to try to get through the 50 pages. Yuck!

Guns and crime analysis rethought

After posting on Lott’s analysis I’ve come to the conclusion that without accounting for trends in crime the estimated effects may in fact be biased. Like Lott, I don’t believe that including quadratic or cubic terms is the way to go either. The charts in his book “More Guns Less Crime” practically scream out ‘event study’ but this was not the approach used perhaps because event studies seem mainly limited to finance.

Briefly as I vaguely remember it, we are interested in how stock prices of a firm respond to an announcement where the date of the announcement is known. In order to isolate the effects of the announcement on the firm the stock price is corrected using time series regression to remove industry or overall stock price effects.

It is unclear to me at this point how an event study can be implemented in Lott’s analysis but I think that the overall trend in crime needs to be taken into account. Since the analysis is at either the state or at the county level and the passage of the law/date of concealed carry law is at a state level, the county/state level crime rates (i.e. robbery, murder, etc.) need to be isolated from the overall trends. The only way to do this perhaps is to regress the state/county level crime rates on the national (or regional) crime rates (and it is unclear whether it is essential to match types of crime at the state/county level to its corresponding type at the national level) and extract the residuals from the regressions.

The residuals would then be used as the dependent variable in the analysis that are in Lott’s book.

Some business reading

1. Competing for the Future by C.K.Prahalad and Gary Hamel - This was a total waste of time. I skimmed most of it and for the most part it reads like a self-help book for managers. It’s full of exhortations and buzzwords. At least economists can claim to do it with models. If the 1970 census occupation codes were still in effect I would categorize management consultants here.
2. Commitment by Pankaj Ghemawat - I wanted to like this book but in the end it still sounded as though ‘commitment’ is nothing more than a ‘success factor’ even though he goes through at length to say it is not. In the end a lot of the ideas may have been displaced by ‘real options’ approach.
3. Built to Last - I wanted to hate this book but found it more interesting than not. It eschews a lot of the management fads and incredibly claims that firms need to take the long view and not pay too much attention to its stock price! What a sacrilege! It also claims that firms and its leaders hold true to its principles whatever they may be! Is this some kind of desiderata for companies? In any case I wonder about the inclusion of Hewlett Packard, Sony and Citicorp. As they say, only time will tell.

Miscellaneous roundup

1. Courtland Milloy of WaPo makes the case for concealed carry after a fatal stabbing. The comments are similar to the ones I’ve made. It makes most sense if the assailant always carries a knife but the potential victim always carries a gun.

2. The way out of the mess in Greece might have been some Brady bonds type approach of a debt swap. Little did I know that a large chunk of the debt was held by Greeks. I see no way out.

Guns and crime redux

I suppose this might be a reason why gun control advocates think that more guns equals more crime:

In the aftermath of a deadly shooting outside a party at a Southeast Washington apartment building, investigators searched for evidence that would positively identify one of their top suspects. But they never found it, and nobody came forward to name him.

As a result, authorities say, police couldn’t obtain the arrest warrant they needed to get the suspect, Orlando Carter, off the street. Days later, according to prosecutors, Carter drove a rented minivan while three of his friends opened fire on another group.  

But Orlando Carter had been recognized at the party. Instead of telling authorities, Andre Morgan testified last week, he planned to avenge his dead friend — and is now charged with plotting to kill Orlando Carter.
...
Morgan, 21, testified that he was outside the apartment after the party with his friend Jordan Howe, 20, on March 22, when he saw Orlando Carter arrive in a car and hand a gun to his brother Sanquan Carter, 21.

Angry after Sanquan’s gold-colored bracelet disappeared, authorities say, the brothers and another man began shooting at the crowd. Howe was killed, and two others were hurt.

Morgan never planned to tell police, he testified. Instead, he told the jury, his first thought as he held Howe after the shooting was: “Kill Sanquan and Orlando.”

People familiar with the case say Morgan and several friends then planned an attack on Orlando Carter the next day — an attack Orlando Carter survived.

Authorities said Orlando Carter then orchestrated further retribution: a March 30 drive-by shooting in the 4000 block of South Capitol Street SE that targeted mourners who had attended Howe’s funeral. The drive-by, and the killing of a 17-year-old during a robbery minutes earlier, left another four dead and six injured.  

The FDA and drug discovery

The FDA has often been blamed for slowing the process of drug development. (An overview here.) There are plenty of problems with the FDA in its current form but this was a different take on the the problems confronting drug discovery:

“All of the 20,000 or so drug products that have ever been approved by the U.S. Food and Drug Administration interact with just two percent of the proteins found in human cells,” he [Brent Stockwell] writes in The Quest for the Cure. “This means the vast majority of proteins in our cells — many of which, in theory, can modulate disease processes — have never been targeted before with a drug.”

Many scientists, he says, have taken this as evidence that these harmful proteins yet to be penetrated by drugs cannot be stopped. Pharmaceutical companies have also succumbed to this viewpoint, he says, shifting their priorities away from the discovery of new drugs in favor of finding new applications for existing ones.

“Pharmaceutical companies face tough economic questions,” Stockwell says. “Should they spend their money going after proteins considered to be the most elusive? Or should they focus, perhaps, on fine-tuning their existing drugs in order to discover new clinical applications for them or to improve them just enough so that they can be marketed as new products?”

The age of big data

This is impressive:
This morning, if you opened your browser and went to NYTimes.com, an amazing thing happened in the milliseconds between your click and when the news about North Korea and James Murdoch appeared on your screen. Data from this single visit was sent to 10 different companies, including Microsoft and Google subsidiaries, a gaggle of traffic-logging sites, and other, smaller ad firms. Nearly instantaneously, these companies can log your visit, place ads tailored for your eyes specifically, and add to the ever-growing online file about you.
…
Adnetik is a standard targeting company that uses real-time bidding. They can offer targeted ads based on how users act (behavioral), who they are (demographic), where they live (geographic), and who they seem like online (lookalike), as well as something they call "social proximity." They also give advertisers the ability to choose the types of sites on which their ads will run based on "parameters like publisher brand equity, contextual relevance to the advertiser, brand safety, level of ad clutter and content quality."  
Adnetik also offers a service called "retargeting" that another … company, AdRoll, specializes in. Here's how it works. Let's say you're an online shoe merchant. Someone comes to your store but doesn't purchase anything. While they're there, you drop a cookie on them. Thereafter you can target ads to them, knowing that they're at least mildly interested. Even better, you can drop cookies on everyone who comes to look at shoes and then watch to see who comes back to buy. Those people become your training data, and soon you're only "retargeting" those people with a data profile that indicates that they're likely to purchase something from you eventually. It's slick, especially if people don't notice that the pairs of shoes they found the willpower not to purchase just happen to be showing up on their favorite gardening sites.
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AdExpose, now a comScore company, watches where and how ads are run to determine if their purchasers got their money's worth. "Up to 80% of interactive ads are sold and resold through third parties," they put it on their website. "This daisychaining brings down the value of online ads and advertisers don't always know where their ads have run." To solve that problem, AdExpose claims to provide independent verification of an ad's placement.
All three companies want to know as much about me and what's on my screen as they possibly can, although they have different reasons for their interest. None of them seem like evil companies, nor are they singular companies. Like much of this industry, they seem to believe in what they're doing. They deliver more relevant advertising to consumers and that makes more money for companies. They are simply tools to improve the grip strength of the invisible hand.

But not as impressive as this:
Andrew Pole had just started working as a statistician for Target in 2002, when two colleagues from the marketing department stopped by his desk to ask an odd question: “If we wanted to figure out if a customer is pregnant, even if she didn’t want us to know, can you do that? ”
…
… the marketers said they wanted to send specially designed ads to women in their second trimester, which is when most expectant mothers begin buying all sorts of new things, like prenatal vitamins and maternity clothing. “Can you give us a list?” the marketers asked.
…
The only problem is that identifying pregnant customers is harder than it sounds. Target has a baby-shower registry, and Pole started there, observing how shopping habits changed as a woman approached her due date, which women on the registry had willingly disclosed. He ran test after test, analyzing the data, and before long some useful patterns emerged. Lotions, for example. Lots of people buy lotion, but one of Pole’s colleagues noticed that women on the baby registry were buying larger quantities of unscented lotion around the beginning of their second trimester. Another analyst noted that sometime in the first 20 weeks, pregnant women loaded up on supplements like calcium, magnesium and zinc. Many shoppers purchase soap and cotton balls, but when someone suddenly starts buying lots of scent-free soap and extra-big bags of cotton balls, in addition to hand sanitizers and washcloths, it signals they could be getting close to their delivery date.

As Pole’s computers crawled through the data, he was able to identify about 25 products that, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score. More important, he could also estimate her due date to within a small window, so Target could send coupons timed to very specific stages of her pregnancy.        

I’m agnostic about some of these privacy concerns but I believe that consumers need to be aware of them. I also use four different browsers for different purposes (Opera, Chrome, Firefox and IE). All are set to delete cookies on exit - except for Chrome which I use solely on Google sites.

My response to cookies is that I find them more annoying than a breach of privacy. The Internet is so cool that all they can come up with is serving ads? Zuckerberg’s response when Eduardo Saverin wanted to have ad companies link up with Facebook was an emphatic no because Facebook was so cool. Look where Facebook is now - they may not be serving ads but they’re definitely trying to sell something.

If users were really upset about this one thing they might be able to do is to render their databases invalid. Deleting cookies is one way. Randomly clicking away at ads is another. Sometimes I amuse myself by responding to pop up surveys and giving responses that are way out of whack.